Rayanecrazt7393 Rayanecrazt7393

08-07-2017
Business

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If the expected inflation rate is 4 percent and the nominal interest rate is 9 percent, the expected real interest rate is _____.?

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meerkat18 meerkat18

18-07-2017

The real interest rate is simply nominal interest rate less the inflation rate. In equation form this is equivalent to:

Real interest rate = Nominal rate – Inflation Rate

Real interest rate = 9% - 4%

Real interest rate = 5%

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